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RBC | “There’s no way to sugarcoat this budget. It’s kind of ugly.” That’s how county finance and budget department director Chris Singleton introduced the 2017 county budget Monday at the Fairfield Center. The budget shows a deficit of $19.4 million.
Multiple factors are to blame, Singleton explained.
First, revenue is down. Property tax revenue is expected to drop by 29 percent because of reduced valuations. Specific ownership tax (paid on motor vehicle registrations) is down 24 percent, sales and use taxes are down 36 and 39 percent, respectively. Intergovernmental funds (severance taxes, federal mineral lease funds, and Payment in Lieu of Taxes) are expected to decrease by 9 percent. Overall, the county is looking at somewhere between an 8 and 16 percent overall decrease, depending on what comes in from intergovernmental sources.
Singleton said county departments were asked not to turn in requests for capital spending for 2017 unless it’s “absolutely needed.” Some items have been postponed. Personnel expenses have been held to their current levels, and non-personnel expenses were set by averaging costs from 2014-2015 and adding a 12 percent cushion.
Property tax, which supports the county’s personnel costs, has been knocked back to 2009 levels. Assessed valuation for oil and gas is down 43 percent.
“We did a lot with those good years,” Singleton said of the high points in 2008 and 2009 and the subsequent justice center and broadband project. Now, however, the county is going to have to tighten its belt and watch its spending, particularly operations.
While personnel is the biggest cost of operations, the 2017 budget includes no cost of living adjustments or merit increases for the 147.56 full time employees. Like everyone else, the county is being hit with health insurance premium increases. Wages are down $109,000, but insurance costs are up $210,000.
“Operating revenue is going to exceed expenditures for a few years. Instead of relying on revenue, we have to rely on fund balances. We’ve got to make that stretch as far as we can,” Singleton said.
Another part of the challenge is that after several years of capital projects like the justice center, the courthouse and broadband, 2017 will be the year some of those bills come due and the money has to be paid out. The money has been in the budget all along, but now it’s time to pay the bill. That means the ending fund balance in 2017 will be lower than normal for the county, and there is some uncertainty as to how much money will need to come from contingency funds to cover operating expenses.
Singleton urged the commissioners to maintain a contingency fund high enough to cover 12 months of operations for “as long as you can.” The cost of operations for the county runs about $1 million a month. Policy dictates maintaining a minimum of three months in contingency for operating costs.
“Everything is going down,” Singleton said. “I hope that things start turning (around) with new policies toward energy in the White House, but it’s going to take a while.”